In recent years, the Chinese government has continuously strengthened its regulation of cryptocurrencies; however, a ruling from a court in Shanghai has left the public eagerly anticipating the future direction of China's cryptocurrency policy. This ruling indicates that cryptocurrencies are regarded as commodities in China, and personal possession is not illegal. The implications behind this ruling and its impact on China's cryptocurrency policy and blockchain development are worth exploring in depth.
Recently, the People's Court of Songjiang District, Shanghai, concluded a case involving a service contract dispute arising from the validity of a cryptocurrency issuance and financing service contract. The final ruling explicitly stated that merely holding cryptocurrency is not illegal for individuals, which means that on a legal level, individuals can legitimately hold cryptocurrencies such as Bitcoin. This not only provides protection for those worried about the legality of holding coins due to policy uncertainties, but also reflects that the legal and regulatory attitude towards cryptocurrencies is not entirely exclusionary.
In this regard, Judge Sun Jie stated that although China prohibits cryptocurrency trading, cryptocurrencies themselves, as a type of virtual commodity, possess legal property rights. While the state prohibits the use of cryptocurrencies as a means of payment, it does not prohibit individuals from holding or transferring cryptocurrency assets. This indicates that under the current legal framework in China, cryptocurrencies are still accorded commodity attributes and property rights protection to some extent.
However, despite the court ruling that individual possession of cryptocurrency is not illegal, this does not mean that all related activities of cryptocurrency are legal in China. The court also emphasized that token issuance and financing activities are illegal financing behaviors that have not been approved, involving illegal fundraising and financial fraud, among other criminal activities. Therefore, any organization or individual engaging in token issuance and financing activities within China is prohibited.
Judge Sun Jie emphasized that the anonymity and decentralization characteristics of cryptocurrencies can easily be exploited by criminals, potentially leading to the disruption of financial order and harm to the public interest. Therefore, although the law does not completely prohibit the existence and possession of cryptocurrencies, related commercial activities are still subject to strict limitations.
It is worth mentioning that this ruling comes at a time when the Chinese government is continuously tightening its regulatory policies on cryptocurrencies. Since 2017, China has successively halted all ICO (Initial Coin Offering) activities within its borders and in 2021 completely banned cryptocurrency trading and mining. These strict policies have made China one of the most restricted countries for cryptocurrency activities globally.
In fact, China has long exhibited a contradictory state in the development of cryptocurrencies and blockchain technology. On the one hand, China has completely banned cryptocurrency trading and has massively expelled mining enterprises; on the other hand, the Chinese government strongly supports the development of blockchain technology. The authorities have repeatedly emphasized that blockchain is the "core of future technology" and hope to promote innovation in the digital economy and supply chains through blockchain technology.
The core of this policy contradiction lies in China's desire to leverage the advantages of blockchain technology while avoiding the potential risks of cryptocurrency to financial stability and capital outflow. However, completely severing the connection between cryptocurrencies and blockchain is not realistic, as cryptocurrencies are an essential part of the current blockchain ecosystem.
Today, in the face of the growing acceptance of cryptocurrencies in international markets and investor attention, whether China will ease its cryptocurrency ban has become a topic of great interest. In recent years, the development of cryptocurrencies in other countries has been very active and rapid. For example, US regulatory agencies have classified cryptocurrencies such as Bitcoin and Ethereum as commodities, while allowing the legalization of related financial products such as Bitcoin futures trading. Europe is also formulating clearer regulatory frameworks to standardize and encourage the development of the cryptocurrency industry.
This international trend undoubtedly provides a reference for China’s policy adjustments. If China can properly balance the relationship between financial risk and technological innovation, cryptocurrencies may become a part of China's efforts to promote the digital economy rather than a hindrance to its development. This potentiality has made it a focal point of interest among industry insiders whether China, as the world's second-largest economy, will adjust its policies in the cryptocurrency field.
Some experts point out that while China's attitude towards cryptocurrencies is strict, there have been signs of policy loosening in recent years. For example, Hong Kong is actively promoting cryptocurrency-related policies at the regulatory level, providing a legitimate trading platform for international investors. This open stance is seen as a testing ground for policy 'relaxation' in mainland China. In addition, China is also promoting the development of the digital yuan and is trying to draw on the underlying technology and ecosystem experience of cryptocurrencies in the process.
Therefore, China may gradually relax its regulatory stance on cryptocurrencies in the future to adapt to the development trends of global financial markets. Compared to previous comprehensive bans, future policies may adopt a more flexible and cautious approach to promote the development of blockchain technology while ensuring financial security.
Of course, there are many opinions in the current market, and whether China will reconsider its cryptocurrency policy in the future remains unclear, but recent signals do indicate a possible path of change. The court's ruling, experiments in Hong Kong, and developments in international markets all leave room for potential policy adjustments.
If China can guide the healthy development of the cryptocurrency industry within a regulatory framework, it can avoid financial risks while seizing the global competitive advantage of blockchain technology, making China a key player in the global cryptocurrency and blockchain industry.
In summary, the transition of China's cryptocurrency policy may be a gradual process, but in today's world where decentralized technology is becoming increasingly important, moderate adjustments to policies will have a profound impact on the development of the digital economy in China and globally.
